The parents of Madeleine McCann were last night 'bitterly disappointed' after losing their eight-year libel battle against a former police chief who accused them of hiding their daughter's death.

The couple learned the 'devastating news' on the eve of their younger twin children's 12th birthdays.

They are tomorrow due to be celebrating Sean and Amelie's special day.

The long-suffering family could now face financial ruin as they face paying Goncalo Amaral's huge court costs and could be sued themselves by the former policeman.

The parents of Madeleine McCann, who have reportedly lost their appeal to Portugal's highest court over ex police chief Goncalo Amaral's hurtful book claiming they covered up their daughter's death

Judges ruled Mr Amaral's 'exercise of his freedom of expression was not considered abusive' and 'was within admissible limits in a democratic and open society, which excludes the illegality of possible damage to the honour of the McCanns.'

The couple had won 500,000 euro damages from their tormentor, whom they branded 'a poisonous liar' but, under Portuguese law, this was never handed over to them while proceedings were ongoing.

The payout would have been added to the official Find Maddie Fund set up through public donations and boosted by big-hearted celebrities to finance the worldwide hunt for the missing girl.

The Fund once stood at £1million but is now closer to £300,000 and could be wiped out by the Portugal's Supreme Court shock ruling.

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A source close to the family said: 'It’s not good news. We just don’t know what to do but we need to sit down with our lawyer and discuss it.

'We’ve gone to the pinnacle of the Portuguese legal system and we’ve lost. We now have to pay a sizeable amount in costs.'

As the Scotland Yard search for Madeleine – who disappeared as a three-year-old from a holiday apartment in the Algarve's Praia da Luz – is being wound down the McCann's had been keeping the soon-to-be-obliterated fund as a life-line to pay for their own ongoing search the moment the investigation, codenamed Operation Grange, ends.

A close family friend said: 'This news is devastating, not just for Kate and Gerry but for Madeleine wherever she is.'

Ex GP Kate and heart doctor Gerry, both 48, from Rothley, Leicestershire, live in hope that 'a miracle' will one day reunite them with their daughter. If still alive, she will turn 14 in mid May.

The appeal hearing in Lisbon which ruled against the McCanns was held in private.

The three-year-old Madeleine vanished from her Algarve holiday apartment in May 2007 and has never been seen since

The couple's lawyer Isabel Duarte had not even been informed it was happening until after the event.

A spokesperson from her office in the Portuguese capital said: 'This is a big disappointment and very bitter for us and for Mr and Mrs McCann.

MCCANNS: 'WE ARE EXTREMELY DISAPPOINTED AT RULING'

Speaking after the ruling, Kate and Gerry McCann said: 'What we have been told by our lawyers is obviously extremely disappointing.

'It is eight years since we brought the action and in that time the landscape has changed dramatically, namely there is now a joint Metropolitan Police-Policia Judiciaria investigation which is what we've always wanted.

'The police in both countries continue to work on the basis that there is no evidence that Madeleine has come to physical harm.

'We will, of course, be discussing the implications of the Supreme Court ruling with our lawyers in due course.'

'We know the libel decision has gone against us but we do not know the basis of the ruling and will not find out until Thursday.'

Ms Duarte, who was away on business in the North of the country, had not been made aware, her colleague George said.

The decision is a major milestone in Gerry and Kate McCann's eight-year fight over a book written by Amaral, pictured, who led the initial hunt when Madeleine vanished

He explained: 'The Supreme Court meet to consider their ruling and make a decision and do not have to inform either party. Isabel was not there and neither was Mr Amaral.

'We are disappointed and will be making our comment on the basis of the ruling when we have it.'

Mr Amaral, 56, who the McCanns first sued for libel June 2009, won the lengthy legal fight after judges decided he had the 'right to freedom of expression.'

Madeleine's parents could now lodge an appeal to the highest court in the land, the European Court of Human Rights.

But a source close to the exasperated couple said: 'I think the fight is finally over. They want to concentrate on finding Madeleine and don't think they have the time or energy to lodge yet another appeal.'

Mr Amaral, who led the initial bungled search to help find their daughter, claimed in a once-banned book that Madeleine was dead.

He was later sacked for criticizing the British police handling of the case.

He has since made a fortune from his best-seller 'The Truth of the Lie' in which he claims Madeleine is dead and her parents 'staged a cover up'.

It has been translated into six languages and sold hundreds of thousands of copies worldwide.

It led to libel action from the distraught McCanns and action in a civil court, an appeal court and finally the Supreme Court.

Amaral, pictured, is understood to have earned 400,000 euros (£344,000) from his book before it was banned and a subsequent TV documentary

The McCann's fiercely deny his allegations. In a 36-page writ, lodged nearly eight years ago, they describe him as a self obsessed, manipulative money-grabber and accuse him of libel and breaching their human rights.

In documents they describe in detail the pain and anguish he has caused the family by repeatedly smearing them, and say his slurs have left them 'totally destroyed' and most importantly had hindered the search for Madeleine.

In online postings to his supporters last year, Mr Amaral said: 'We are in the face of a mere battle in a war that is far from over.'

Before the final ruling lawyer Ms Duarte said the McCanns were confident of a victory, saying: 'We reasonably expect compensation for the dreadful damages this book has brought the family.'

Kate and Gerry McCann in the days after their daughter Madeleine went missing while on holiday in Portugal in 2007

The family's spokesperson Clarence Mitchell, who hadn't been made aware of the court ruling until journalist informed him: 'They have nothing to say yet.'

He had previously said: 'If they win the case every penny they receive in damages will go into the Madeleine Fund.

'Kate and Gerry would be entitled to the money personally but it will go into the pot to help fund the search.'

Scotland Yard are busy investigating one 'last throw of the dice' lead in a bid to end the family's torment but time could be running out as police now have just two months left of guaranteed Government funding to continue to unravel an 'important' new tip.

Detectives on the Madeleine inquiry recently revealed they are working on a final theory that the youngster was kidnapped by a European trafficking gang.

The 'spotters' are believed to have targeted the charismatic blonde toddler taking photographs of her while she was playing on the beach and beside the pool at her holiday apartment.

Amaral is understood to have earned 400,000 euros (£344,000) from his book before it was banned and a subsequent TV documentary.

He claimed in the book Madeleine had died in their holiday flat and they had faked her abduction to cover up the tragedy.

The book was released just three days after Gerry and Kate McCann were told their status as arguidos or formal suspects had been lifted on July 21, 2008.

Portuguese prosecutors reopened their probe into Madeleine McCann's disappearance in May 2014, and are now working in close coordination with Scotland Yard's scaled-down Operation Grange probe into the youngster's fate

Amaral's lawyer Miguel Cruz Rodrigues claimed in court the McCanns had taken legal action against his client 'to rid themselves of guilt for their negligent conduct' in leaving Madeleine and her siblings alone while they ate tapas with friends nearby.

He also claimed their lack of co-operation with the Portuguese police authorities had led to the archiving of the investigation in 2008.

Portuguese prosecutors reopened their probe into Madeleine McCann's disappearance in May 2014, and are now working in close co-ordination with Scotland Yard's scaled-down Operation Grange probe into the youngster's fate.

Last year the McCanns revealed they had told their twins 'everything' about Madeleine's disappearance and said the youngsters still remember her and talk about her often.